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German economy predicted recession in Q3

UNITED STATES, WASHINGTON (OBSERVATORY) — The largest economy among the EU countries – Germany – may face recession, experts at the Oxford Economics Institute predicted.

It is noted that the German economy is the largest in Europe, since it occupies about 20% of the total GDP of the EU countries.

“The resumed sharp fall of the German IFO index in August underscores the short-term risks of industrial weakness provoking a recession in Europe’s largest economy,” the institute said.

“Now we anticipate a lack of growth in the third quarter against the expectation of a modest rise of 0.2%, and the risks are clearly inclined to the downside,” said Oxford Economics.

The index of the business climate in Germany (index of the IFO research institute) in August fell to 94.3 points compared with the revised value of 95.8 points in July.

Analysts interviewed by Reuters forecast a decrease in the index to 95.1 points compared with the original July index of 95.7 points.

The German government expects a further decline in the country’s GDP in the III quarter and a transition to recession, as the German magazine Spiegel previously wrote with reference to cabinet documents. It is expected that the fall in the III quarter will be 0.1%. In the first quarter of 2019, the German economy grew by 0.4%, and in the second quarter it decreased by 0.1%.

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